In September 2021, California Governor Gavin Newsom signed three pieces of legislation related to housing across the state. Governor Newsom signed two new pieces of legislation -- Senate Bill 9 and Senate Bill 10 -- and extended the Housing Crisis Act of 2019 with the introduction of Senate Bill 8. Each bill signed into law by Governor Newsom is intended to alleviate pressure on California's housing and rental markets by removing previous limitations. Senate Bill 10 permits local governments to change their zoning laws, allowing denser developments near job opportunities and public transportation. SB 9 will enable homeowners to either turn their single-family home into a duplex or subdivide their residential lot and build a fourplex. These bills make on existing legislation from several years ago, encouraging single-family homeowners to build ADUs on their properties. Below, we consider how changes to California's single-family only zoning laws could affect the housing affordability crisis. We also look at the origins of California's housing crisis and examine why certain parties continue to oppose changes to the state's zoning requirements. Follow below to learn all about changes to single-family zoning in California.
In the September 2021 broadcast "California Enacts New Measures To Handle Housing Shortage" for NPR's Weekend Edition Sunday, Lulu Garcia Navarro discussed policy changes with The New York Times economics reporter Conor Dougherty. Writing for Bloomberg CityLab, Benjamin Schneider also quotes Dougherty because of his recent book Golden Gates: The Housing Crisis And A Reckoning For The American Dream. In conversation with Dougherty, Garcia Navarro notes that there is currently a 5.5 million home deficit in the United States. When one considers renters in need of affordable housing, this number shoots up to 6.8 million.
California alone is short almost 2 million housing units. Despite a years-long housing crisis, the article "California ends single-family zoning" from The Economist reports that "California has built fewer than 100,000 homes a year, on average, in the past decade." Crippled by the financial crisis of 2007, "permits issued for new construction plummeted...and have not yet returned to their previous level." There are many factors to consider when examining this nationwide housing crisis, from stagnating development and skyrocketing demand to zoning restrictions and other policy issues. Below, we believe the origins of California's housing crisis and why it continues today.
For decades, California legislators have searched for ways to alleviate the Golden State's affordable housing and homelessness crises. Some point to California's restrictive single-family only zoning laws as an early contributor to the state's affordable housing crisis. In his article "How to Make a Housing Crisis" for Bloomberg CityLab, Benjamin Schneider looks at the origins of California's affordable housing crisis.
First, Schneider points to "contract cities," which popped up across California in the mid-twentieth century when suburbs also emerged. According to Schneider, contract cities were residential subdivisions that contracted "vital municipal services like police, fire and sanitation to the county" and created "concentric circles around old urban centers."
These subdivisions granted "suburban homeowners with the solace that...they would be protected from what might euphemistically be called big-city ills." In the past, such exclusive – often expensive – contract cities were rarely cited as progenitors of the housing crisis. However, Schneider argues that contract cities across California "have played a huge role in exacerbating housing problems outside their borders." Members of these communities fought to keep them small in the name of "preserving their physical and demographic character" even as they enjoyed surging property values.
A surprising ally has supported this anti-growth ally over the last several decades: environmentalists. Quoting writer Conor Dougherty, Schneider writes that while environmentalists had good intentions, "'this good intention of stopping sprawl soon became cover for stopping everything.'" Over time, the "broad language of the California Environmental Quality Act enabled this conceptual fudging, granting ordinary citizens the power to halt coastal subdivisions and green urban infill projects alike." While SB 9 does not supplant the CEQA, it does make residential development in specific coastal communities easier by limiting the need for public hearings.
Writing for Bloomberg CityLab, Schneider also points to Proposition 13 when discussing California's housing crisis. For those unfamiliar with Prop 13, Schneider writes that the law began as "a 1978 ballot initiative that capped property taxes." By basing property taxes on the original purchase price rather than the current appraisal value, Prop 13 unintentionally encouraged cities to 'privilege more lucrative commercial development."
This is because under Prop 13, "housing could cost cities more in services than it would bring in through taxes." As a result, Prop 13
"set the stage for the state's severe jobs/housing imbalance—and tacked hefty fees on new housing construction." Newly signed SB 10 aims to reverse some of these ills by encouraging housing development near critical infrastructure across California.
In his article "Too Few Homes: Is Proposition 13 to Blame for California's Housing Shortage?" for KQED, Matt Levin of CalMatters explains further details. Levin writes that because properties are now "taxed based on the original purchase price…[it is] relatively inexpensive to hold onto land, even when the market is hot." Quoting housing economist Ralph McLaughlin, Levin notes that when the amount of property tax owed increases with rising property values, property owners are less inclined to hold onto vacant land. Instead, they either develop the land themselves or sell that land to developers.
Referencing data collected by the Legislative Analyst's Office, Levin notes that "vacant lots in California were less likely to be developed the longer they were owned." According to Levin, some proponents of Prop 13 argue "other regulatory barriers to new development [such as] permitting fees and other bureaucratic hurdles that new construction must navigate are far bigger impediments." Senate Bills 9 and 10 seek to remove some of these barriers and encourage the construction of new housing developments.
Though there have been many attempts to change and/or repeal Prop 13, none have been particularly successful. The most recent measure was California Proposition 15, which was placed on the ballot in 2020. If passed, this measure would have triggered property tax reassessments on industrial and commercial properties but not residential ones. Property taxes for commercial and industrial properties would have been based on current value rather than on the original purchase price had the measure passed.
As mentioned above, Benjamin Schneider attributes some aspects of California's housing crisis to the CEQA in his article "How to Make a Housing Crisis" for Bloomberg CityLab. For those unfamiliar with this law, we turn to the OPR resource "CEQA: The California Environmental Quality Act." According to the Governor's Office of Planning and Research, the "CEQA requires public agencies to 'look before they leap' and consider the environmental consequences of their discretionary actions."
In short, the Act "is intended to inform government decision makers and the public about the potential environmental effects of proposed activities and to prevent significant, avoidable environmental damage." In the past, the CEQA has prevented residential development across California – particularly in coastal communities. While its application is often justified, some argue that the CEQA has been abused. Hoping to increase density in sparsely populated suburban areas of California, provisions of SB 9 and 10 limits the ability of those who would use the CEQA to fight development projects that could otherwise alleviate the state's housing crisis. We explain this in greater detail below.
As many reading, this will already know, "zoning" refers to how its owners can use the land. Usually, a state or local government determines the zoning of each community that falls within its purview. Some areas are "mixed-use," while others are purely residential or commercial. Single-family zoning – also called R1 zoning in California – means that only one single-family home can be constructed on each lot.
The accessory dwelling unit laws passed between 2016 and 2019 under Section 65583(c)(7) of the California Health and Safety Code (HSC) allowed homeowners to add mother-in-law units to their properties. According to Jerusalem Demsas in the article "California is ending a rule that helped cause its housing crisis" for Vox, ADU legalization "added more than 20,000 new homes to the state's housing supply."
ADUs and JADUs are smaller than single-family homes – typically between 500 and 800 square feet. Because of this, allowing the construction of accessory dwelling units on single-family zoned lots did not actually change local zoning laws. However, when Governor Newsom signed the 2021 housing bills, he did significantly alter California's single-family zoning laws.
Before Governor Newsom signed SB 9, single-family zoning was everywhere in California. Erin Baldassari reports in her broadcast "Facing Housing Crunch, California Cities Rethink Single-Family Neighborhoods" for NPR's Weekend Edition Saturday that "more than two-thirds of all residential land" in California was "dedicated solely to single-family homes" before Newsom signed SB 9.
Writing for The New York Times in their article "Cities Start to Question an American Ideal: A House With a Yard on Every Lot" for The New York Times, Emily Badger and Quoctrung Bui elaborate. According to Badger and Bui, "94% of residential land is zoned for detached single-family homes [in] San Jose, California." Even in cosmopolitan Los Angeles, where a number of industries flourish, "75% of residential land is zoned" solely for single-family lots.
Even before Governor Newsom passed SB 9, some cities in California had already promised to eliminate single-family zoning – citing a history of racial and economic inequality. In her broadcast "Facing Housing Crunch, California Cities Rethink Single-Family Neighborhoods" for NPR's Weekend Edition Saturday, Erin Baldassari argues that single-family zoning has carried this inequality well into the 21st century. Quoting UC Berkeley housing researcher David Garcia, Baldassari explains. According to Garcia, "'housing is one of the main drivers of segregation and systemic racism in America.'" In California, this began in 1916 when single-family neighborhoods were first used as "a way to block a Black-owned dancehall and Chinese-owned laundries from certain neighborhoods."
Garcia and Baldassari note that single-family zoning became much more influential in the 1970s. Single-family zoning was one of the only ways to keep neighborhoods "white" after Congress passed The Fair Housing Act in 1968 to limit racial discrimination and segregation. Baldassari writes that cities across the country "banned multifamily dwellings in neighborhoods where previously, they were allowed…[because] multi-unit buildings tended to be occupied by people of color and recent immigrants.'"
As detailed above, single-family zoning has also limited affordable multifamily housing development near jobs and transportation. By rethinking restrictive zoning laws, researchers like Garcia believe Californians can start to "tackle high housing costs and redress decades of racial segregation in housing."
There are a few reasons why certain Californians oppose putting an end to single-family zoning in the Golden State. Some believe eliminating R1 designations will hasten gentrification, doing nothing for affordable housing. Others think it will increase congestion and traffic, making their communities less safe.
In the article “Bay Area cities want to end single-family home zoning, but will it create more housing?” for The San Francisco Chronicle, J.K. Dineen considers gentrification concerns. Speaking with South San Francisco Mayor Mark Addiego and Peter Cohen of the Council of Community Housing Organizations, Dineen explains why certain opponents fear “upzoning could lead to displacement.”
Mayor Addiego fears developers will quickly “gobble up” inexpensive parcels in downtown SF, turning them into fancy duplexes and fourplexes rather than allowing homeowners to transform them into affordable housing. Cohen agrees, noting that the SB 9 model would probably work better “in suburban communities with larger lot sizes and less expensive land” – not those in expensive cities of coastal California.
Some opponents of SB 9 have expressed concern over increased traffic, parking congestion, and noise from vacationers renting units for a few nights. It is easy to understand these concerns, as laws passed between 2016 and 2019 encouraging the construction of JADUs and ADUs did cause such problems. In response, certain California cities restricted ADUs as vacation and short-term rentals.
Unlike the ADU laws, SB 9 does not allow short-term rentals. SB 9 explicitly states that rental units – either duplexes or fourplexes – created through SB 9 must be leased for 30 days or longer. Each new team must also have at least one off-street parking spot.
Contrary to beliefs held by some opponents of the bills, neither SB 8, SB 9, nor SB 10 actually prohibit developers or property owners from building single-family homes. Senate Bills 8, 9, and 10 simply lift restrictions on certain types of housing development in some regions of the state. In short, each bill makes housing development easier. The State Government hopes to make growth less arduous, resulting in more affordable housing across California. We explain what SB 8, SB 9, and SB 10 change and how they differ from previous bills in greater detail below.
We begin with SB 8, which extends the Housing Crisis Act of 2019. In her article “Victorious in recall, Newsom refocuses on California housing crisis” for Cal Matters, Manuela Tobias explains that SB 8 “accelerates the approval process for housing projects and limits fee increases on housing applications at the local level.”
Intended to streamline the permitting process for new housing projects, the Housing Crisis Act of 2019 was passed at an incredibly inopportune time. Shortly after the HCA passed, the COVID-19 pandemic hit, and construction halted. One of the main reasons Governor Newsom extended the HCA by signing SB 8 was to make up for time lost during the pandemic.
Both Senate Bill 9 and Senate Bill 10 are new pieces of legislation intended to boost housing development across the state. In his article “Collins: What does SB 9 and SB 10 really mean for our neighborhoods?” for the San Jose Spotlight, Neil Collins explains how SB 9 could help homeowners and renters alike. Collins writes that “SB 9 does not prohibit the building of single-family homes, but rather offers a choice to existing homeowners of how they can develop their property.” Before Governor Newsom signed SB 9, California homeowners “could have a maximum of three homes on their parcel—the primary home, plus a full-size ADU as well as an attached junior ADU.”
SB 9 allows homeowners to build up to four homes on their property. They can either subdivide their lot into two parcels to build a fourplex or keep their lot as one parcel and build a duplex. Under SB 9, homeowners could also choose to subdivide lots larger than 2,400 square feet and build a single home on each parcel. According to Robert Eliason in his article “SB 9 allows some homeowners to subdivide and build on their lots” for BenitoLink, the new law “fast-tracks these projects, and cities are required to approve the division with little review and no public comment.”
● Subdivided lots must be more significant than 2,400 square feet in size.
● Homeowners cannot make these changes to single-family lots in historic districts or a single-family lot with a landmark designation.
● Local governments can deny permits for duplexes and fourplexes if they threaten the environment or public safety.
● Subdivided parcels must be at least forty percent of the original property’s square footage.
● No subdivided lots may be less than 1,200 square feet in size.
● Local governments may require homeowners to include one or more additional parking spaces per unit.
● Only under certain conditions may a California homeowner demolish existing structures to build a new single-family home, duplex, or fourplex.
● Those who subdivide their property must live there for at least three years.
● In the interest of creating more housing for long-term tenants, short-term rental leases are not permitted.
SB 10 is much different than SB 9 in that it does not directly affect single-family zoning. In their September 2021 article “What just happened with single-family zoning in California?” for The LA Times, Jon Healey and Matthew Ballinger explain. Ballinger and Healey write that Senate Bill 10 “allows for denser development near public transit corridors, such as bus and train lines.” Newsom passed Senate Bill 10 to encourage the construction of affordable housing near jobs and transportation. Unlike SB 9, Healey and Ballinger note that “SB 10 does not mandate any changes in local land use.” Instead, SB 10 lets local governments alter their zoning laws “much more quickly to allow housing developments with up to 10 units if they’re located in areas well-served by mass transit.”
Development of these multifamily housing complexes can also be streamlined “in urban areas that are already largely zoned for residential use” under this bill. As mentioned above, property owners and environmentalists have often leveraged the CEQA to prevent denser development in specific California communities. According to Ballinger and Healey, SB 10 allows local governments to make zoning changes “without triggering a CEQA review, although multiunit projects proposed in the new zones would still be subject to the environmental law.” This should streamline the development of new housing projects across the state if local governments choose to make such changes.
Lastly, we consider the impacts Senate Bill 9 and Senate Bill 10 could have on communities across California. Because SB 10 leaves zoning changes up to local governments, it is difficult to project how much the bill could alleviate California’s housing crisis. As such, we turn our attention to SB 9, which was considered by a team of researchers from the UC Berkeley Terner Center for Housing Innovation. In their July 2021 paper “Will Allowing Duplexes and Lot Splits on Parcels Zoned for Single-Family Create New Homes? Assessing the Viability of New Housing Supply Under California’s Senate Bill 9,” Ben Metcalf et al. Note that recent ADU laws have been some “of the state’s more effective housing solutions.” According to Metcalf and colleagues, 40% of all housing building permits processed in the city of Los Angeles last year were for ADUs. Metcalf et al. note that “this progress signals the significance of easing approvals and barriers to smallerscale, infill development in low-density areas.” As such, Terner Center researchers remain cautiously optimistic about the potential impacts SB 9 could have on our housing crisis.
Their research estimates “SB 9 could enable the creation of over 700,000 new homes that would otherwise not be market feasible.” While SB 9 limits the development of duplexes and fourplexes “in high fire hazard areas, historic districts, non-urbanized areas, and existing renter homes,” many other neighborhoods remain. When accounting for these properties, Terner Center researchers project “SB 9 would enable the development of more units on 410,000 singlefamily parcels, of which 110,000 parcels would become newly feasible.”
Because fourplexes are more time-consuming and expensive to construct, the Center estimates “duplexes will be the most dominant form…of development.” Of course, constructing a duplex or fourplex remains financially out of reach for many California property owners. As such, researchers from the Center expect most of SB 9’s impact to occur in richer areas where owners can easily afford to convert their single family homes to duplexes. In all likelihood, most conversions would occur in coastal areas of California like Marin, Santa Cruz, Santa Barbara and San Luis Obispo counties.
As detailed throughout the course of this post, California's building codes and zoning laws are changing. Where homeowners could once only build a single-family home, many can now build duplexes or even fourplexes. In an ever-evolving landscape, having the right design-build firm is crucial. If you plan to build a new custom home in California, reach out to the team at Element.
Not only does our team of professionals fully understand recent – and upcoming – changes to California's residential building code and zoning laws. Our team also understands the challenges wildfires, terrain, and other unique qualities of California pose. To learn more about our process and our team, reach out here.
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